1. Field of the Invention
The present invention relates to money or value transfer systems in general, and to a method and apparatus for enabling worldwide access to financial services between individuals or entities.
2. Discussion of the Related Art
Historically, formal money transfer services have been dominated by three channels, namely money transfer organizations (MTOs), such as Western Union, banks that offer the service through diverse inter-bank networks as a value added offering to their banked customers, and postal offices that have leveraged their connecting wire and mail infrastructure to also provide money transfer services. Other informal unregulated services exist and are dominated by migrant entrepreneurs operating within specific corridors or ethnic groups.
Money transfer services can be classified on the basis of the origin and destination of the money. Domestic transfers of value are performed in a variety of ways, be it via cash, checks, electronic or credit/debit cards. The other type of transfer is cross-border or international transfers. Migrant community members in developed countries are significant users of such international transfers, also referred to as remittances, since they often send money to support family or community members in their homelands. Currently used methods for transferring money differ in the interface used by the sender and in whether the sender is banked or un-banked, i.e., whether he is using a checking account to pay for the transfer or not. A sender using an MTO has to visit a physical branch or retail outlet, such as a Wal-Mart store, often present identification, and fill in a form specifying the sender and receiver information and amount to be transferred. The sender then pays the total amount to be sent plus a convenience/commission charge with cash, debit, EFT or credit. The MTO agent enters the information into a computer terminal that creates and processes the transactions in real time—that is the money is made available for immediate pick up by the recipient. However, the recipient needs to be alerted or informed by the sender of the amount and transaction code in order to be able to claim the funds (often banks or agents do not inform the recipient of the transfer unless specifically instructed to do so by the sender, a step that incurs an additional fee for the sender). The recipient then proceeds to an MTO agent to withdraw the funds, often in local currency after an exchange rate, fixed by the MTO, has been applied. The exchange rate is generally lower than the wholesale rate (at which the MTO purchased the local currency) and the spread (difference between retail and wholesale rates) is kept by the MTO. Transfer is enabled by the MTO's own proprietary network.
The first method, as used by MTOs, requires a sender to visit a physical branch or retail outlet, present identification, fill a form specifying the transaction details and pay the amount to be sent plus a convenience/commission charge in cash, debit, EFT, or credit. Using the MTO system and network, the money is made available for immediate pick up by the recipient. The recipient is alerted of the transfer either by the sender, or by the MTO for an extra fee. The recipient then visits an MTO agent to withdraw the amount, possibly in local currency with an exchange rate which is lower than the rate at which the MTO purchased the local currency and the exchange differentials are kept by the MTO.
The second method involves banks, and requires the sender to have a bank account or credit card, and the recipient to possess a bank account with a local institution that is connected through a banking wire transfer network such as SWIFT/IBAN. The sender visits a local branch of a bank, and in a manner similar to the first method, initiates a transfer. The money is withdrawn from the sender's bank account and credited to the recipient's bank account. Alternatively, the receiver can withdraw the sum from an automatic teller machine (ATM) if one is available and if the recipient has an ATM card. The transaction may take between a few business days to two or more weeks to complete.
The third method is an extension the two previously described methods, but instead of the sender visiting a branch, or a bank, an online interface such as a web site is used. The sender is required to register and provide credit/debit card or bank account information, prior to initiating a transaction.
The fourth method is provided by mobile operators as an extension of their service offerings, and relies on their particular infrastructure to enable transactions. This method utilizes a mobile handset as an input/output device for transaction details. This service is not available outside specific corridors/regions.
All described methods necessitate a final stage, after the delivery of the money, which is the transaction settlement between the sending and the disbursing entities. These generally involve a settlement between the banks or institutions involved in the transfer of the money. This process is often costly as money exchanges hands several times through intermediary banks or institutions and value is lost during currency conversion.
Thus, existing methods for sending and receiving money are still costly because of the heavy reliance on “brick and mortar” operations, proprietary technology systems, and currency conversion. Moreover, they often cater to banked senders and are not ubiquitous in their coverage and access at the receiving end. In addition, conventional channels such as MTO and banks do not provide a seamless interface for senders and recipients where an individual can start a transaction on one interface but continue or check status on a different interface. Some methods which focus only on domestic markets require a lengthy and cumbersome authentication or registration process, making them inaccessible for most migrants and un-banked users and not an option for sending money worldwide. Methods that attempt to address the un-banked users rely on the creation of stored value accounts or the use of pre-loaded ATM cards.
There is therefore a need for a method and apparatus that will enable sending and receiving money in a variety of ways without necessarily having to physically visit a location on the sending end, and having to visit a physical branch on receiving end only to obtain cash (unless partners offer cash delivery), and on the receiving side. The method and apparatus should enable a receiver to utilize the transfer in a variety of ways, should cater to un-banked users, provide the sender the ability to check the status of a transaction, and be cost effective.